Celebrity Sentiment and Stock Volatility
In this ongoing series, we ask members of the team critical guiding questions that drive the way we approach our work with ChatQ. In this piece, Marketing Lead Hana Takada discusses the recent publicized impact that celebrities have had when it comes to sharing their opinions, and corresponding stock price movements.
It seems that every few weeks, we see sensationalized news pieces of “celebrities causing stock price movements,” where one comment by a highly influential celebrity causes a significant down or uptrend in a stock price. According to these coverages, celebrities with large millennial fanbases draw significant attention to stock movements, acting as tipping points and exacerbating movements, and creating snowball effects on discussions of market sentiment across social and digital channels. We’re here to break down this phenomenon from the point of market sentiment, to evaluate the hype and see what’s really going on.
In late February of this year, mega-celebrity Kylie Jenner of the Kardashian empire tweeted the following:
The tweet in question came after a series of disappointing updates to the Snapchat UI/UX, wherein stories were difficult to locate, and advertisements had significantly increased their presence between stories and on the platform at large. Snapchat is the main product of Snap Inc., holding company for other products such as Bitmoji, Spectacles, and lesser known platform Zenly.
Jenner, top influencer across most social platforms, contributes significantly to the Snapchat platform through her active and loyal fanbase. Closely after tweeting her thoughts on the update, it seems that the stock took quite a dip, feeling the blow of Jenner’s 18 word Tweet.
According to The Verge, upon posting her tweet, Snap Inc. stock fell dramatically, dropping 6% throughout the day, which ultimately lead to a $1.5 billion loss in market value.
That being said, Snap Inc. had been having a rough year both financially and creatively already. Their stock has had a steady downtrend since their IPO, and they’ve never actually made it back up to their starting price. While their Snapchat and Bitmoji products maintain popularity, the aggressive overtake in usage of Instagram Stories pushed by Zuckerberg’s Facebook is undeniable, to say the least.
And it seems like things just keep getting worse over at Snap Inc., and we’re only three months into the year. The company faced a miraculous jump in the first two weeks of February, soaring to price levels that haven’t been seen since June 2017. Right as their prices were recovering from Jenner’s public backhand slap to the app, the Snapchat advertising team made a critical error in publishing quite a distasteful ad. As part of an advertising campaign for poll/game like-app, they published a poll-vertisement asking users whether they would rather “slap Rihanna” or “punch Chris Brown.”
Upon the multitude of screenshots and posts to Twitter and Instagram regarding this controversy, Rihanna (with currently 61 million followers) took to her Instagram Story to make her position as a domestic violence abuse survivor and advocate, incredibly clear. While denouncing the advertisement outright, she called out the team that had its hand in approving and running the ad, and ended her statement with a pithy “throw the whole app-ology away.”
Following Rihanna’s widely publicized reaction, there have been reports that Snap Inc. prices went down over 4% within the day. And while Snap Inc. obviously issued an apology, the team has a lot of work to do to build their reputation back up after this incident.
Comparing these two Snap Inc. price events sheds light on market sentiment sharing and validation within the paradigm of millennial digital culture. Both events were precipitated by existing negative sentiment, with the celebrities acting as strong reactionary forces that validated the beliefs and sentiments of the majority existing sentiment.
Jenner’s tweet was a general consensus of product sentiment: the new app UI/UX was difficult to navigate, and the key feature of watching stories was harder to watch than ever. This was common thread within any millennial’s timeline on social media. Memes had already gone through their entire lifespan joking at the expense of Snapchat’s new UI/UX design when Jenner had voiced her opinion. Her tweet served to further validate and solidify the majority of the opinions that were being shared.
Rihanna’s post was also borne out of a reactionary force which validated the negative sentiment felt by the general public of most common sense oriented people who think that joking about domestic violence is tasteless.
In offering an antithesis to our argument, it can be said that celebrity driven Western culture tends to oversimplify, sensationalize, and place celebrities as the subject and agent of all outcomes and events. In reality, the context for each case is different and nuanced. Therefore, in assessing this topic, we have to be ready to critique the media approach in its inherent bias. From simple things, like assuming that follower count equals organic reach, media outlets over-emphasize the reach that celebrities have. Even if the above point were true, the nature of social media in its brevity and need to oversimplify and sensationalize in a matter of seconds, irritates the existing rash of clickbait culture that places celebrity voices in a vacuum and de-contextualizes the reality of the event.
What can therefore be evaluated fairly from these events is that while celebrity voices are exacerbated and over-emphasized by the media, they do serve as key factors in validating the sentiments of communities at large. They validate existing sentiment, whether this sentiment existed beforehand or precipitated an increase in sentiment trends and this reflects to price movements. The important part here is the aggregate sentiment of larger communities.
It isn’t just celebrities that “caused” these price events, the power lies in the community contributing to larger market sentiment trends, on top of which the celebrities offer their opinion.
So what can we do with this information? How can we focus celebrity and expert opinion sharing into validating thoughts for Millennial and later generations in how they approach market sentiment analysis and investing? What can be said about validation of existing aggregate market sentiment, its power in the stock market, and the cross section in which all of these topics lie: celebrity pop culture, and sentiment sharing on social media? How can we capture the aggregate market sentiment currently shared by always-online Millennials on a financial platform, and leverage this data to determine whether shifts in market can be predicted?
We don’t have the answers or a concrete solution, yet, but we have a start on the questions, and we’re going to stay hungry on the topic of market sentiment, and approach these questions from unique perspectives. Whether that’s pop culture, or from a technical background, we think that everyone’s opinion and point of view has something to add to the product we are innovating here at ChatQ.
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